Miscellaneous income: losses

Relief is available for a loss on a transaction, where, had a profit arisen, the income would have been chargeable under the miscellaneous income sweep-up charge or any of the provisions in the table below. (There are restrictions on the inclusion of certain provisions in the table.)

Income Tax provision

Corporation Tax provision

Description

Pt2 Ch18 Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005)

Pt3 Ch15 Corporation Tax Act 2009 (CTA 2009)

Post-cessation receipts: trades, professions and vocations

Pt3 Ch8 ITTOIA 2005

Pt4 Ch7 CTA 2009

Rent receivable in connection with certain UK concerns

Pt3 Ch9 ITTOIA 2005

Pt4 Ch8 CTA 2009

Rent receivable for UK electric-line wayleaves

Pt3 Ch10 ITTOIA 2005

Pt4 Ch9 CTA 2009

Post-cessation receipts: UK property businesses

Pt4 Ch2 ITTOIA 2005

—

Interest

Pt4 Ch9 ITTOIA 2005

—

Gains from contracts for life insurance etc

Pt4 Ch11 ITTOIA 2005

—

Transactions in deposits

Pt4 Ch12 ITTOIA 2005

—

Disposals of futures and options involving guaranteed returns

S579 ITTOIA 2005

—

Royalties and other income from intellectual property

S583 ITTOIA 2005

S908 CTA 2009

Income from disposals of know-how

S587 ITTOIA 2005

S912 CTA 2009

Income from sales of patent rights

Pt5 Ch3 ITTOIA 2005

—

Films and sound recordings: non-trade businesses

Pt5 Ch4 ITTOIA 2005

—

Certain telecommunication rights: non-trading income

Pt5 Ch5 ITTOIA 2005

—

Settlements: amounts treated as income of settlor

S682(4) ITTOIA 2005

S965(4) CTA 2009

Adjustments after the administration period

S844(4) ITTOIA 2005

S1277(4) CTA 2009

Withdrawal of relief for unremittable foreign income after source ceases

Tax arbitrage: calculation or recalculation of income etc following receipt notice

Note that there must have been a possibility of profit. For example, post-cessation expenses are not such a loss even though receipts would be chargeable under the post cessation provisions (see BIM90000 onwards). This is because simply paying an expense is not a transaction which can yield a profit.

Income against which relief is given

For Income Tax a loss may be set against income charged under the sweep-up provision or any of the provisions listed in the table above for the same tax year. Any remaining surplus may be carried forward and set against income so charged for later tax years (taking the earliest year first, and so on).

For Corporation Tax a loss may be set against income charged under the sweep-up provision or any of the provisions listed in the table above for the same accounting period. Any remaining surplus may be carried forward and set against income so charged for later accounting periods (taking the earliest such period first, and so on).

Proviso

Losses cannot be set against amounts charged which arise from computational adjustments, e.g. recoveries of reliefs which have been over-allowed. The losses must also arise from transactions, and not, for example, from the fall in value of life policy contracts. Nor, for the purposes of Income Tax, can they be set against amounts which do not form part of the taxpayer’s total income.

Claims

For Income Tax, a claim that a loss has arisen on a transaction, where a profit on that transaction would have been chargeable, must be made within four years of the end of the tax year of loss. A separate claim to set the loss against particular income for a tax year may be the subject of a separate claim to be made within four years of the end of the tax year in which relief is to be given.

For Corporation Tax, a claim that a loss has arisen on a transaction, where a profit on that transaction would have been chargeable, must be made within four years from the end of the accounting period to which it relates.

Where the officer is not prepared to admit the existence of a loss alleged to have been incurred, the case should be referred to CTISA (Technical).